Episode #120: “We have 3 kids, $1k saved, $0 invested. Is it too late for us?”

Ana is 31 and Gabriel is 29. They have three young kids and will be celebrating their tenth wedding anniversary soon. This episode deals with addiction and recovery work, therapy, deep family influences, and imbalanced money dynamics. His money mindset is stuck in the past—but she needs his help.

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Show Transcript

Download the full transcript PDF.

[00:00:00] Ramit: Have you ever admitted out loud that you were spoiled?

[00:00:02] Gabriel: Yeah. They told me that I was spoiled, that I would talk like a little spoiled kid. 

[00:00:06] Ramit: Do they still spoil you?

[00:00:10] Gabriel: Um, I would think in a way, yeah. Probably. 

[00:00:18] Ana: Our first child was a sweet surprise. And so right off the bat, we’re having kids and working full time, but then I started noticing, with our finances, things are not adding up. Where is this money going? Where is it all being wasted? And there were a few times where I was like, I’m not going to come home. This is it. It’s over. I don’t want anything to do with it. And it’s so funny because I graduated with a psychology degree, and looking back now, I’m like, all the signs, all the flags were there, but when it’s your family, you put the blinders on.


[00:00:50] Ramit: Let’s meet Ana and Gabriel. Ana’s 31, and Gabriel’s 28. They’ve got three young children, and they’ve been married almost 10 years. Now, they currently live in Gabriel’s parents’ house, and Ana wants to move on. She wants to begin the next part of their lives, but there’s a challenge when it comes to the way that they talk about money. And there is something in their history that we’re going to dive into today. This is Ana and Gabriel.


[00:01:19] Ana: The situation is I feel like we’ve been stuck doing the same patterns over and over again. And even though over the years, our income has grown, it just seems like we can’t get out of living with Gabriel’s parents. Separate home, but same property or land. And so even after having three kiddos, we’re still there.

[00:01:40] Ramit: And, uh, your children, how old are they?

[00:01:42] Ana: So we have a two-year-old, a four-year-old, and a seven-year-old.

[00:01:46] Ramit: All right. Congratulations. That’s great. Beautiful family. You’re living with Gabriel’s parents in a separate– like an ADU or some type of separate unit. Is that right?

[00:01:56] Ana: Yeah. It’s like a studio.

[00:01:58] Gabriel: Yeah. We did have our own apartment, and Ana was going to school, and I was the only one working. She was working a part-time, so that was still tight. I mean, we made it work. My parents helped us out. We’ve been married for nine years. It will be 10 years next year. So yeah, I was 20 years old. So they were helping us out sometimes with groceries. They would go to Costco and help us out. 

[00:02:25] Ramit: So it’s been tight since you met. You could theoretically go the rest of your lives with money being tight. Why come here? Why decide to potentially make a change, Ana?

[00:02:40] Ana: Because it’s too tight, yeah, I want to be able to move out to rent a house and just have more space where I’m not necessarily with my kids in the same room all the time.

[00:02:52] Ramit: Gabriel, why do you think that we’re here right now? Why do you think Ana filled out this application?

[00:02:59] Gabriel: I think I made a bad decision, to be honest. I feel guilt. I made some impulsive decisions, and I think it was my fault we dug ourselves maybe into a hole, and I’m accepting my fault. 

[00:03:15] Ramit: What was the impulsive decisions?

[00:03:16] Gabriel: For example, I bought a quad during times that I was, uh, my addiction.

[00:03:23] Ramit: What’s a quad? 

[00:03:25] Gabriel: Uh, a four-wheeler. An ATV. Yeah. 

[00:03:28] Ramit: All right. How much did that cost?

[00:03:30] Gabriel: 8,000.

[00:03:31] Ana: No, about 9,000.

[00:03:33] Gabriel: Right now, it has a flat tire, and I haven’t fixed it. 

[00:03:36] Ramit: How many times you ride that thing?

[00:03:38] Ana: Like five times. 

[00:03:41] Gabriel: Like 25 times. 

[00:03:43] Ramit: That’s like $2,000 a ride. Cool.

[00:03:45] Gabriel: Yeah. And I admit it was an impulsive– that’s one of the impulsive purchases that I had because I did it on my own, and then I just told Ana, oh, I’m going to go pick up the quad. 

[00:03:57] Ana: He leaves, and he comes back, and there’s a trailer with a quad on it in front of our house. And I was like, what is this?

[00:04:06] Ramit: Wow.

[00:04:07] Ana: Yeah.

[00:04:08] Ramit: Was this during the full-blown addiction? It was impulsivity as well?

[00:04:14] Ana: Yeah.

[00:04:14] Gabriel: Yeah. Getting a car maybe that was over our budget at the time.

[00:04:19] Ramit: Which car?

[00:04:20] Gabriel: Uh, BMW X3 2019. 

[00:04:24] Ramit: How much did that cost?

[00:04:26] Gabriel: What was it, Ana? I think it was 65.

[00:04:31] Ana: Yeah, around 60. Yeah.

[00:04:32] Ramit: 60,000. Okay. All right.

[00:04:35] Gabriel: And the other big thing, obviously, was that I wasted a little over three years on my addiction. I did the math, and it was around, I would say, 30,000 that I wasted. It was drugs and alcohol, but I’ve been sober three years now, so I feel like there’s a new me. It’s like a Gabriel 2.0. And so I want to work at it, and I want to get out of my parents’.

[00:05:05] Ramit: Uh-huh.

[00:05:05] Gabriel: It’s nice to have them, but sometimes I want to have my own space. I want the kids to have their own space. So I’m willing to work at it. 

[00:05:13] Ramit: I love hearing it. Thanks for being honest. Thanks for taking responsibility. And I love your vision. Gabriel 2.0. That’s cool. In fact, I’ll tell you this. I’ve never heard someone who went through addiction, look back, and actually calculate how much they think it cost them.

[00:05:30] Gabriel: I know it was a big chunk, and it opened my eyes even more and made me want to change my mindset and maybe my lifestyle as well too now. It’s not a small amount.

[00:05:42] Ramit: It’s a lot of money. But I’ll tell you something. Sometimes people come on, and they’re very concerned that they did the math wrong. I’m less concerned about that. What I always look for is, what type of character traits do they show? Do they come prepared? Do they care for their partner? Are they listening? And the fact that you calculated that is very impressive. You came prepared and ready to change. I appreciate that. I noticed that. And, um, that means a lot, I think, to us, and to you. 


[00:06:19] Ramit: I really love this. I never judge someone for not knowing some technicality about personal finance, and I’ll never judge someone for being poor or not having enough money. Why would I? What really impresses me about Gabriel is how seriously he is taking this entire conversation. He got help. He even looked back to calculate how much money he spent during his addiction, and he’s acknowledging that he was impulsive. Personally, I would rather work with someone in $50,000 of credit card debt with this attitude than someone who makes $250,000 and has no desire to change. We’ll be right back after this.

 [00:07:01] Now, what I want to do is I want to hear from Ana. I’m not an addiction expert, so I’m going to ask for the broad strokes, and then I want to move on to the financial part of our conversation. But I do think it’s important to know the backstory here.


[00:07:14] Ramit: So Ana, can you tell me, from your perspective, the brief version of what was it like as Gabriel, went through addiction and seems to have gone through treatment and is now Gabriel 2.0? What’s that like for you?

[00:07:31] Ana: It was very hard. I started noticing just little things here and there, and I would brush him off. Our first child was a sweet surprise. And so right off the bat, we’re having kids and working full time. Of course, my attention wasn’t always on him, and my concern wasn’t on him, so I would let it slide, and so a couple of months would go by. 

[00:07:52] But then I started noticing, with our finances, things are not adding up. Where is this money going? Where is it all being wasted? Um, so again, I would question him, but somehow ends meet. So then life would keep going. Yeah. I would start finding little things here and there, and I question it, and he would always deny it. And it’s so funny because I graduated with a psychology degree, and looking back now, I’m like, all the signs, all the flags were there, but when it’s your family, you put the blinders on.

[00:08:24] So yeah, it was hard. Just praying about, what do I need to do? What’s my next steps? I obviously want my kids to be safe. I want them to be protected. And there were a few times where I was like, I’m not going to come home. This is it. It’s over. I don’t want anything to do with it. But sure enough, after months of encouraging him to seek counseling and to talk to people, he decided to take that big step and go to a facility center, and he was there for three months. And even during that time, my in-laws were super sweet and so supportive, and they helped the ends meet that he obviously couldn’t provide during those three months.

[00:09:07] Ramit: Wow. Three months. That’s a long time.

[00:09:10] Ana: Yeah. It was hard. Yeah. Um, I had two kids, and I was pregnant as well with our third.

[00:09:19] Ramit: Okay. All right. Thank you for sharing that with me. Gabriel, anything surprise you from hearing that?

[00:09:30] Gabriel: Well, it’s just sometimes I feel guilt. That’s why I’m here, to try to make it up and cover that ground that I lost. And I guess that would be why I’m nervous of when the podcast airs, say, the addiction part, and then people will comment. I just don’t know how I’m going to react. I do care, but I don’t care, if that makes sense. 

[00:10:01] Ramit: I’ll tell you what, I don’t have a lot of experience with people who have gone through addiction and certainly gone to treatment centers, but you let me deal with the people online who say anything. Okay?

[00:10:14] Gabriel: Okay.

[00:10:15] Ramit: Of course, there are people on the internet who say things, but I can tell you right now, just from listening to both of your stories, there’s nothing here that people would make fun of, that any reasonable person would. And if they do, I will handle them myself. Okay?

[00:10:32] Gabriel: Yeah. Thank you. Yeah.

[00:10:34] Ramit: What’s it been like in those three years that you’ve been back?

[00:10:39] Gabriel: Well, when I came back, there was some guidelines or parameters that I had to follow, so I didn’t have a cell phone. I couldn’t have money with me. I had to be with someone– 

[00:10:50] Ramit: In other words, you were never alone in six months.

[00:10:53] Gabriel: Yeah, never alone. Yeah, never alone. One was because, obviously, I could fall back, and two was also because I was taking medication. Now I’m off the medication, so now I’m alert more. I’ve just slowly, like I said, been updating into a new version of myself, and I think it’s getting better talking about money, um, but we still need work on it. 

[00:11:18] Ramit: Okay. Well, that’s why we’re here. Good. Okay. Ana, what’s it been like for you? Three years. I understand that he wasn’t allowed to have money for a while. Talk to me about that.

[00:11:31] Ana: Yeah. So the first year was a big adjustment because, yeah, like you mentioned, the first six months, gosh, I’d even say it was even longer. There was rules that they sent him home with. And of course, his parents and all of us made sacrifices to be able to help him through those rules. Um, he could never be anywhere by himself. No money.

[00:11:51] Yeah. And so I would say, definitely, the last two years have been a total turnaround, just who he is, who his character is. I would tell him at the beginning, is this really you? Is this guy here to stay? And now, total difference because now he’s totally active with the kids. He wants to do stuff with the kids. He wants to be there for the kids.

[00:12:10] Ramit: Okay. All right. Uh, you know what? I just want to acknowledge, Ana, obviously, you took on so much of the burden of helping and supporting, but also his parents. Sounds like you have a really strong family support system. We don’t all have that, and so big kudos to your families as well.

[00:12:30] Ana: Thank you.

[00:12:31] Gabriel: Thank you.


[00:12:32] Ramit: I want to acknowledge something really special about Ana and Gabriel. They’ve gone through Gabriel’s addiction, and listen to the way they talk. They are a team. Now, whether you’ve had personal experience with addiction or not, you know that this can’t have been easy. And we are only hearing a compressed version of what their entire family went through for years. What’s really remarkable to me is how they are approaching this conversation. 

[00:12:59] Do you notice the tone of voice? Do you notice the body language if you’re this watching on YouTube? Notice even how they’re framing the challenge. They have kids, and they live in a studio at his parents’ place. I’ve had people on this podcast who have a lot more money, and they live in a much bigger place, and they were screaming and catastrophizing about it. But to me, I noticed this ease that Ana and Gabriel have that comes from being a team. Of course, they have problems, but what I really love is that they are approaching it with calmness and unity. That is something that I really admire.


[00:13:36] Ramit: So you mentioned that you have different money mindsets. How would you describe your money mindset, Gabriel?

[00:13:43] Gabriel: I am more of a spender, like, um, spend now and think about it later. Again, I’m an impulsive buyer, I guess, sometimes. Trying not to be. 

[00:13:58] Ramit: And so you just stay away from those areas of temptation, right?

[00:14:04] Gabriel: Yes.

[00:14:05] Ramit: Ana, what’s your money mindset? How would you describe it?

[00:14:08] Ana: Um, I would say I’m okay with waiting to buy things. I could save up and then buy whatever we need later. Yeah. Or if we don’t have the money for it, then we don’t have the money for it type of thing.

[00:14:22] Ramit: And if you don’t have the money for something, Gabriel, will you buy it on credit?

[00:14:28] Gabriel: Uh, yeah. If we don’t have the money, [Inaudible] no credit. I try not to get anything on credit now.

[00:14:37] Ramit: Okay. All right. 

[00:14:38] Ana: But.

[00:14:43] Ramit: Go ahead.

[00:14:45] Ana: But we did just get a washer on credit.

[00:14:48] Ramit: How much?

[00:14:50] Ana: 800.

[00:14:51] Ramit: And why, just out of curiosity? I mean, your parents are being very generous. You can stay there, but is it your responsibility to replace the washer, or did they offer to do it?

[00:15:03] Ana: Gabriel offered.

[00:15:04] Gabriel: Yeah, I offered.

[00:15:06] Ramit: Oh, you offered. 

[00:15:06] Gabriel: Yeah, I offered.

[00:15:07] Ramit: With what money?

[00:15:10] Gabriel: Well, Ana did tell me that we had– uh, since I came back from rehab, I’ve just let her handle the money. And she did tell me that we did have the money to pay it off. And I guess my mindset is still, if we can get on credit and just pay it off slowly, not slowly, but in a few, like two months, pay it off.

[00:15:34] Ramit: Why not just get it just theoretically with cash or something like that? Why put it on a credit card? If you say credit card points–

[00:15:44] Gabriel: No, no, no, just zero interest. I was going to say zero interest.

[00:15:48] Ramit: Did you open up a Lowe’s card? He did.

[00:15:53] Ana: He did.

[00:15:54] Ramit: What do I say about those retail cards?

[00:15:59] Ana: They’re not good

[00:16:00] Ramit: They’re horrible. What does that mean, 0% interest?

[00:16:08] Gabriel: We don’t get charged interest, um, I guess.

[00:16:12] Ramit: You also wouldn’t get charged interest if you just hand it over $800.

[00:16:15] Gabriel: Yeah. Yeah. And I guess that’s, again, one of my spending patterns that I maybe have, and that’s the mindset that I want to change. Yeah. 

[00:16:28] Ramit: Hmm. What do you think would be a healthy relationship for the two of you to have with money? What would it look like?

[00:16:38] Gabriel: To be more on board on the decisions, I guess. 

[00:16:41] Ramit: What does that mean, on board?

[00:16:42] Gabriel: She told me at the store, we can pay it off right now. And I’m like, yeah, but– I don’t know. That’s my old thinking, and it just came out like, why, if we have zero percent interest? So, um, maybe now I need to be like, yeah, you’re right. Let’s just pay it off.

[00:17:05] Ramit: Does she know more about money than you do?

[00:17:08] Gabriel: Um, yeah, I think so.

[00:17:12] Ramit: I’m just imagining the two of you at Lowe’s. There’s a gigantic pallet with a washer, and you’re just about to check out, and then you’re like, you know what, I think we should open up a Lowe’s card. And she’s like, huh? Why did that come up for you that you wanted to advise her to open up a Lowe’s card?

[00:17:34] Gabriel: Well, now that you say it, I think, in a way, it might have been the way that I was brought up. My dad, he has the money, but he’ll go to Home Depot and stuff like that and get– say, he needs to build a fence. He’ll get it on the credit card, even though I know that he has the money. 

[00:17:53] Ramit: Question. Is your dad debt-free?

[00:17:55] Gabriel: No, no, no.

[00:17:57] Ramit: What? Wait, what? So your dad’s like, let’s charge it up on the card, but he’s got credit card debt.

[00:18:08] Gabriel: Yeah. 

[00:18:09] Ana: He could be. 

[00:18:11] Gabriel: He could be, yes.

[00:18:12] Ramit: So why isn’t he?

[00:18:17] Gabriel: Honestly, the same way maybe that me and Ana can’t. I try to tell him, if you have the cash, why don’t you just– I try to give him advice.

[00:18:27] Ramit: You told your dad that? You’re like, don’t do what I do. Just do what I say. It’s better that way. 

[00:18:32] Gabriel: Yeah.

[00:18:32] Ramit: Uh, is this about to become a multi-generational podcast? I’m going to get your dad. Your parents are going to come on here too. It’s going to be amazing. 

[00:18:39] Gabriel: That would be awesome. That would be pretty cool.

[00:18:41] Ramit: So can I go out on a limb here and say that some of the dynamics in your marriage in terms of money, might they be mirrored 30 feet away, in your parents’ house?

[00:18:54] Gabriel: Um, I would think yes.

[00:18:57] Ramit: Okay. 

[00:18:57] Gabriel: The problem is that I don’t have the income that my dad has, so maybe that’s not a good idea for me to mirror. That’s why I wanted to come on here and do the podcast, because I need to change that mindset.

[00:19:15] Ramit: Let’s talk about it because, I’ll tell you something, if I had to go get a washer and, God forbid, I had to walk into one of these home repair shops and I saw a washer for 800 bucks, I would put it on my credit card. I would. I’ll put it on my credit card, knowing that I have my credit card set up to automatically pay off in full every single month. I don’t even look at it. It just pays it off. I also know that I have the cash to do that. Makes sense?

[00:19:42] Gabriel: Yeah.

[00:19:44] Ramit: So we probably need to adapt a little bit of the way you think about money. No problem. That’s money mindset changes. I don’t mind that. I’m also interested in the dynamic between the two of you, how you make money decisions. 

[00:19:56] Ana: He fully trusts me. Every week, he’ll just give me what he makes, and I just stick it in the bank. And then from there, I just pay off everything, or whatever. Um, I just make sure there’s enough.

[00:20:09] Ramit: So you’re handling the day-to-day. Gabriel, it sounds like you’re mostly on board with what Ana wants to do, but once in a while, you’re going to go out and get something of your own, and then Ana’s got to figure out how to make it work, right?

[00:20:25] Gabriel: Um, yeah, but it’s not like I just go out and like, oh, I’m going to go get this. I do ask her, like, is there a chance? 

[00:20:33] Ramit: Have you ever said no?

[00:20:36] Ana: I think so. Trying to think of the last time I said no. I don’t know if I fully said no, but I think it’s like, oh, can you wait for it or something? I don’t know. It’s probably the same thing as saying no.

[00:20:53] Ramit: Not the same thing at all.

[00:20:55] Ana: Oh.

[00:20:56] Ramit: It’s not at all. That’s interesting. 

[00:20:59] Ana: I can’t think of the last time I said no.

[00:21:01] Ramit: Okay. So Ana, you’re the financial executive in the household, but also the operational person, the day-to-day. Gabriel is bringing his paycheck to you and saying, here you go. Once in a while, he comes and asks, hey, I need to buy these shoes, etc, is there money? To which you always reply either yes or, can you wait a couple of weeks? Fair?

[00:21:33] Ana: Yeah.

[00:21:34] Ramit: All right. Is this system working for you?

[00:21:37] Ana: No, because I would want for him to be in the vision of where I want our money to go. Um, so I would like for him to know that stuff, so that way he wouldn’t have to come to me and ask like, hey, can I get this? Or I need work boots, or whatever.

[00:21:52] Ramit: Okay. Fair enough. Uh, and Gabriel, same question for you. Is this system working for you?

[00:22:00] It’s going to be a yes because I feel the less– I know there’s been a situation in the past where I see that we have money in the account and it’s easy for me to, oh, it’s fine. I’ll get it. So sometimes, I think, that’s my struggle. Sometimes I don’t even want to know how much money we have because then I’ll make those impulsive decisions. And so, um, I do want to get more involved in knowing. Good answer. I like that you said, yes, it is working. Because it’s a great system for you. You just bring your paycheck, and then you’re like, here you go. I’m out of here. ,. Give me some shoes. It is working for you, but I also like that you say, hey, I want to know a little bit more. However, when I see money in there, sometimes it makes me want to spend it. I get that. Before we continue, are you continuing to get treatment for the impulsive behavior?

[00:22:59] Gabriel: Um, well, I’m meeting with my therapist, um, every two weeks. 

[00:23:03] Ramit: You talk about this?

[00:23:06] Gabriel: Um, a little, yeah. Not too much, but maybe I can bring it up.

[00:23:12] Ramit: Great. That would be awesome. 


[00:23:14] Ramit: Now back to the episode.

[00:23:16] That scene at Lowe’s is so interesting to me. Just this idea that a couple would even be debating whether to open up a credit card while standing in line is absolutely wild to me. That would be like me standing in line for Chipotle and deciding to buy an alligator. It literally makes no sense to me.

[00:23:35] And then, Gabriel telling Ana, who knows way more about money, that they should open up the card. And Ana, who’s never said no, and even sounded startled by my question, just quietly letting it happen, all the while the ghost of Gabriel’s dad is watching over them. This is like a movie scene. I’m actually curious what else Gabriel learned from his dad about money.


[00:24:01] Gabriel: I was an only child for a long time. My dad has his own landscaping business, and yeah, I’d never really struggled with anything around the house. I was spoiled, I guess, you can say.

[00:24:15] Ramit: Have you ever admitted out loud that you were spoiled?

[00:24:18] Gabriel: Yeah.

[00:24:20] Ramit: Okay. Are your parents both alive?

[00:24:21] Gabriel: Yes.

[00:24:22] Ramit: Okay. And if I asked them today, did you spoil Gabriel, what would they say?

[00:24:27] Gabriel: They would say yeah.

[00:24:28] Ramit: Okay.

[00:24:29] Gabriel: They told me. Yeah. 

[00:24:30] Ramit: What did they say?

[00:24:32] Gabriel: They told me that I was spoiled, that I would talk like a little spoiled kid. And I would say, not anymore. 

[00:24:39] Ramit: Uh-huh.

[00:24:41] Gabriel: Yeah.

[00:24:42] Ramit: Okay. Um, do they still spoil you?

[00:24:47] Gabriel: Um, I would think in a way, yeah. Probably.

[00:24:56] Ramit: How so?

[00:25:02] Gabriel: I don’t know, but I just feel like they do help us out a lot. And I don’t know if that’s spoiled or not. I guess, the only thing I can think of is, I work with my dad, and he just gifted me a truck, uh, for us to have a second car. I don’t know if that’s spoiling me or not.

[00:25:24] Ramit: How much is that truck worth?

[00:25:26] Gabriel: He paid 20,000 for it from one of our clients.

[00:25:30] Ramit: Oh, okay, he bought it for 20k and gave it to you.

[00:25:33] Gabriel: Yeah.

[00:25:34] Ramit: And did you have to pay anything for that truck? 

[00:25:37] Gabriel: No. 

[00:25:37] Ramit: Okay. All right. Got it.

[00:25:39] Ana: It’s just the registration.

[00:25:41] Gabriel: I guess my dad would be an impulsive buyer as well. He’ll show up with a pickup, um, that a client offered him. 

[00:25:51] Ramit: Okay. Ana, um, would you say that, uh, Gabriel’s dad might be impulsive with money as well, Gabriel’s words?

[00:25:58] Ana: Yeah. So I definitely see a lot of similarities. It’s fair enough to say. And his dad shares his story, his testimony all the time. So his dad was also an alcoholic. And so I think that the impulsiveness, they share that because I definitely see his dad– my father-in-law is the most generous person I’ve ever met, and still– I don’t know if this is impulsive, but he will gladly pay for everyone’s meal if we go out to dinner or do things like that. Yeah.

[00:26:31] Ramit: Mm-hmm. And Gabriel, are you the same way in terms of that generosity?

[00:26:36] Gabriel: Yeah, I believe so.

[00:26:37] Ana: He tries. Yeah.

[00:26:38] Gabriel: I try, yes, you could say to my budget, I guess. I do it to a smaller scale.

[00:26:47] Ramit: So for example, if you were out with, let’s just say friends, or family, or something like that, might you offer to just pick up the check for everybody?

[00:26:56] Gabriel: Yeah, if it’s not something– say, if we go out with friends to In-N-Out, I might pay for their meals, which is not super expensive. But if we go out to a nice restaurant, then that’s where I’m like, no. I can’t.

[00:27:11] Ramit: Got it. All right. Ana, how about you? How were you raised with money? What do you remember about growing up as a kid, uh, and money in your family?

[00:27:19] Ana: I remember watching my dad scratch his head a few times just as he was sitting with mom in the bed, just taking out the money to pay rent. I remember we had to rent one of our rooms to a roommate, um, just to meet the rent for that month. Granted, we did live in Southern Orange County, so rent was expensive. Yeah.

[00:27:40] And there is a season where that happened, part of my life growing up, maybe in the elementary school years, but then later, we didn’t need that kind of help anymore. We didn’t need a roommate anymore. Yeah. And so I remember going to the store and my mom saying, no, we can’t buy a Barbie, or things like that.

[00:27:59] Ramit: Mm. What changed for you to not have to have a tenant in your house?

[00:28:06] Ana: My dad’s income went up. He just started getting better at what he was doing, which was pour cement, concrete. He started doing the foundation of homes and stuff like that.

[00:28:17] Ramit: Got it. Um, did your mom work?

[00:28:20] Ana: No, she was a full-time stay-at-home mom.

[00:28:22] Ramit: Gabriel said that he was spoiled. Would you say, uh, that you were spoiled as a kid or no?

[00:28:29] Ana: No.

[00:28:32] Ramit: Um, did you learn about savings, investing, things like that before you–

[00:28:39] Ana: No.

[00:28:39] Ramit: No?

[00:28:40] Ana: No. We never talked about money. I was actually the one that encouraged my mom to take me to the bank to open up my first checking and savings account. 

[00:28:46] Ramit: Wow. Do you like money?

[00:28:48] Ana: Yes.

[00:28:48] Ramit: When you think of money, what words come to mind for you, Ana?

[00:28:55] Ana: Freedom came to mind. What other word would come? Money. Um, fun and future.

[00:29:07] Ramit: Wow. Freedom, fun, and future. They’re all abundant. They’re all future-oriented. They’re very positive. Do you know that? That’s really striking. Gabriel, what about for you? When you think of money, what words come to mind?

[00:29:30] Gabriel: To me, to have money, obviously, I picture a house, our own house, a home.

[00:29:37] Ramit: Mm-hmm. Okay. Home. What else?

[00:29:40] Gabriel: Um, yeah. Not being so tight, living, I guess, almost paycheck by paycheck. 

[00:29:46] Ramit: It’s really interesting to hear the way that you both think about money. And in a way, it’s funny because two of us can say the same words, freedom or fun, and we can see them totally differently. Because, Gabriel, I bet that quad that you bought was fun, right? Super fun.

[00:30:03] Gabriel: Yeah.

[00:30:04] Ramit: But I bet you that’s not the type of fun that Ana thinks about. Is it, Ana?

[00:30:09] Ana: Right.


[00:30:12] Ramit: It’s very interesting that Gabriel had a positive upbringing with money, but he doesn’t really have a cohesive philosophy about money today. If anything, he mentions it would be not worrying about money. That’s his dream, which is not a real philosophy because the absence of something is not enough to be a financial philosophy.

[00:30:32] And also interestingly, Ana grew up with stress on her family finances, and now she talks about fun, freedom, and future. It’s very interesting how people can have a certain background, and the way they react to that background can be completely unexpected. Now listen to how they divide up the financial responsibilities.


[00:30:54] Ramit: It works in the short term. It actually works quite effectively because Ana seems quite capable, but there’s two problems. One is it drives you apart because she’s the one who has to be responsible all the time and mind the numbers, and you don’t. So that’s a huge wedge, which drives people apart.

[00:31:13] And then two is what happens if something happens to Ana? Now we got an existential problem for someone who does not know how to deal with money. So that’s why I totally respect that in the past, you had to put blinders on. When you came out of rehab and they gave you these rules, of course you had to follow them, right?

[00:31:38] And of course, you had to give up control, and Ana and your family were there to support. And it was fantastic. But what I’m hearing is Ana wants to give back some of that control because, of course, you’ve proved it. I love that you have a support system now where you can talk to a therapist, and we can do this gradually in terms of giving you more control. But I do want you to take the blinders off slowly. How does that sound to you? 

[00:32:02] Gabriel: Um, good.

[00:32:03] Ramit: Okay. Ana, how does that sound to you?

[00:32:07] Ana: Good. 

[00:32:08] Ramit: Why do you think she needs you for this process?

[00:32:13] Gabriel: Because she wants me to be more involved, to be aware of where the money is going and what we’re spending on, and we’ll, um, she wants to pay [Inaudible].

[00:32:26] Ramit: Why does she want you to be more involved? Why?

[00:32:30] Gabriel: Um, because she wants to not be responsible, fully responsible for it.

[00:32:42] Ramit: Maybe. What else? She works full-time, right? Ana, you have a full-time job?

[00:32:47] Ana: Mm-hmm.

[00:32:48] Ramit: And you have three kids. Okay. All right. So you have a busy household. So that’s number one. Gabriel, what is it? Can you say it for me out loud?

[00:32:57] Gabriel: Um, she just wants me to be more involved.

[00:33:03] Ramit: Yeah. She needs a help.

[00:33:05] Gabriel: Yeah, sure. Yeah.

[00:33:06] Ramit: That’s a lot of work for one person. Ana, is that fair to say?

[00:33:11] Ana: Yeah. I think that by you seeing the numbers and what can be done with the numbers will hopefully help us be united into sacrificing now so that we can have a better future.

[00:33:30] Gabriel: Okay.

[00:33:33] Ramit: Okay. Well done. That was really cool. A round of applause for the two of you. It’s hard stuff. To really communicate what actually you want and why, boy, it’s easy for us to jumble it up with a lot of words. And sometimes, we just need really simple, simple things. You have a four-year-old, right? Your four-year-old asks, I don’t know, why is there a moon or something? We don’t need to get into all the astronomy. It’s just like, the moon gives us light at night. Clear. Sometimes we want to start there and be super clear, and then later, we can get into the details. All right. Let’s get into the numbers.


[00:34:20] Ramit: All right, let me walk you through their numbers very quickly. Their assets are zero. Their investments are zero. Their savings are $1,000. Their debt is $56,300. Ana’s gross monthly income is $5,400. Gabriel’s gross monthly income is 3,200. Their combined gross monthly income is 8,600 or $103,000 per year. And finally, their fixed costs are 61%, which is pretty good. However, they pay no rent. 


[00:34:54] Ramit: Total net worth?

[00:34:56] Ana: Negative 55,368.

[00:35:00] Ramit: All right. What do you think about that?

[00:35:05] Ana: It’s scary to me. 

[00:35:07] Ramit: Why?

[00:35:09] Ana: Because if one of us were to lose our jobs, we don’t know where the income would come from. Or again, thinking of the future, there’s no money in our retirement.

[00:35:21] Ramit: Yeah. Okay. And Gabriel, what do you think about that?

[00:35:28] Gabriel: Honest, uh, I feel guilt and regret because I wish I could have done things differently, but I’m, um, hopeful that we can change it.

[00:35:57] Ramit: Powerful. Do you believe that you could change it?

[00:36:00] Gabriel: Yeah. The things that happened, happened, but now the only thing to do now is to look forward and to change my habits that I had before to, um, better ones.

[00:36:13] Ramit: Okay. So negative 55,000 net worth, not great. Just going to be honest. You both are around the age of 30. You have three kids. Okay. In certain cases, that would be disastrous. However, you have a magic card, a joker. And you know what that magic card is? Is that you don’t pay rent. That’s a secret code you both have. So we’re going to talk about that. We’re going to talk about the rest of your spending, but just know that there’s definitely a path forward. You’re not going to be stuck here forever. Okay. And you have $1,145 in car payment, including transportation and gas as well.

[00:37:07] Ana: So the car payment is 745, and then gas is about 400 bucks a month because I commute. 400 to 500 because I commute. Yeah.

[00:37:22] Ramit: What kind of car? 

[00:37:24] Ana: BMW. 

[00:37:24] Gabriel: X3. BMW.

[00:37:25] Ramit: Oh, shit. 

[00:37:26] Gabriel: Mm-hmm. 

[00:37:27] Ramit: How long until that thing is paid off?

[00:37:33] Ana: Oh, I think it’s 20 months.

[00:37:37] Ramit: Twenty months. So less than two years.

[00:37:39] Ana: Yeah.

[00:37:40] Ramit: Okay. And have you explored options to turn that thing in, get something cheaper? Have you looked into that?

[00:37:49] Gabriel: No.

[00:37:50] Ana: I wouldn’t mind at all.

[00:37:52] Gabriel: I wouldn’t either. No.

[00:37:54] Ramit: That’s good. Okay, fine. Let’s put a pin in that. That’s an option. Who knows? All right. Your debt payments are 641. What debt is this, 56,000 in debt?

[00:38:10] Ana: So we have two school loans. We have Gabriel’s and mine. We have the city credit card. We have the quad. I think that’s all on there.

[00:38:23] Ramit: How much is on the credit card?

[00:38:27] Ana: 8,000.

[00:38:29] Ramit: Okay. And the student loans?

[00:38:34] Ana: Um, mine is closer to 12,000. So it’s like 11,800, and I think Gabriel’s is also 11,000.

[00:38:40] Ramit: Okay, and that quad?

[00:38:44] Ana: We have a little under 3,000 left.

[00:38:48] Ramit: I love so many things about this quad. First of all, the fact that I didn’t even know what a quad was. Second of all, that it just shows up one day in the driveway, which is literally inconceivable to me. Third, that you’ve only used it five times, and you’re still paying it off years later. And then my favorite part of all is that it’s just sitting in the back with a flat tire. Couldn’t script it better. Ladies and gentlemen, I’m sorry, ATV, uh, association of America, Ramit Sethi is out here telling people, don’t buy an ATV. Just rent it. You want to go on a nice trip? Just rent it. Uh, 300 bucks a day? God bless. Do not buy an ATV with a flat tire.

[00:39:35] Gabriel: Yes. Do not.

[00:39:37] Ramit: All right. So your debt payments are 640. Are you paying the minimum on that, or are you paying more?

[00:39:43] Ana: On the quad, no. I’m paying way more on the quad. So the quad, I’m paying 300.

[00:39:49] Ramit: What about the credit card?

[00:39:49] Ana: And then our school loans, at least my– uh, the credit card, I’m paying minimum on that. Yeah.

[00:39:56] Ramit: Why are you paying so much on the quad? 

[00:39:57] Ana: Because I want to get rid of it.

[00:39:59] Ramit: Because you hate it. Okay, fine.

[00:40:00] Ana: I want to pay off all the debt. I want to throw in a $1,000 a month on the debt, and Gabriel is not fully on board with that. He says, no, let’s not do that much. Let’s have some extra money to do other things.

[00:40:18] Ramit: Like?

[00:40:19] Gabriel: Maybe a vacation. Um, maybe do more stuff with the kids. My example would be, have the kids hat grow up, and then we are paying off the debt. And then when we have the money, the kids don’t even want to hang out with us anymore. That’s my thing.

[00:40:36] Ana: I want us to have the same goal as to what we want to do with our money.

[00:40:41] Ramit: Got it. Have you both ever articulated what your goal is with money?

[00:40:48] Ana: No. We both are in agreement that we do want to move out of his parents’ house, um, and that we do want to get out of debt, but there’s no roadmap to how we’re going to get there.

[00:41:00] Ramit: It’s just, one day we’d like to do X. That type of thing? 

[00:41:04] Ana: Mm-hmm.

[00:41:05] Ramit: All right.

[00:41:05] Gabriel: Yes. 

[00:41:06] Ramit: If you want to move out of your parent’s house, that’s a pretty big lifestyle thing that affects everything. I say we make a couple of very specific plans around those areas so that they’re not just pie in the sky ideas. That would be my approach with this. Gabriel, would you be on board with that?

[00:41:27] Gabriel: Yeah.

[00:41:28] Ramit: All right. What I want is for you to tell me how you can dramatically change what’s going on here because right now you’re okay, but it’s because you’re subsidized. You have free housing. If you were to go out to the open market, meaning you were to pay the full price of what you “should be paying,” you’d be broke.

[00:41:57] Here’s the way I look at it. I go, if I’m given the gift of free housing, phenomenal. I’m going to take that opportunity, save as much money as possible. I’m going to live lean. And then I’m going to save up huge. And then when we go and get our place, we’re going to be really mindful of how much we add because I want to keep saving money and never have to go backwards. That’s the way I think about it. What do you both think about that philosophy?

[00:42:31] Ana: Yeah. That was supposed to be the intention when we moved back home with his parents, for us to save the money that we would be paying in rent. 

[00:42:40] Ramit: You have $1,000 in savings, and you make $103,000. What happened?


[00:42:46] Ramit: Sometimes you might be fortunate enough to be in a temporarily great financial position. Maybe you moved in with your parents, or maybe you’re getting a big tax refund, or you’ve had your student loans paused for years. Listen closely. The key is to take advantage of these opportunities. They don’t come around that often. Now, most of us don’t do this. We simply go on our merry way, spending like usual, and then when the temporary situation ends, we are stuck. Ana and Gabriel live with their parents. This is the time to be saving thousands and thousands of dollars. 


[00:43:23] Ana: For me, the car payment is definitely, I think, the one that’s horrible.

[00:43:29] Ramit: Yes.

[00:43:30] Gabriel: Yeah, the car payment would be super helpful. Yeah, I would be on board getting rid of the car.

[00:43:36] Ramit: How are you going to do that?

[00:43:38] Ana: I know. How do you do that?

[00:43:39] Ramit: You could sell it. You can get a much cheaper one. Do you know, if you sold it, how much you would get for it?

[00:43:48] Gabriel: Uh, no. I researched a couple of years ago, but I don’t know what we would get for it now.

[00:43:56] Ramit: Okay. I would definitely look into that. You have to remember there’s two things that are important when it comes to selling your car. First of all, is how much would you get? Most of the time, you’re surprised in a bad way. But the second thing that a lot of people forget is the monthly costs. It’s really important. 

[00:44:14] So if you’re currently spending over a $1,000 a month and you’re able to cut that down dramatically, over the course of a year, 18 months, two years, that savings is massive. It could be 500 bucks a month. That’s pretty impressive. You two get a nice, safe used car, save a bunch of money every month. 

[00:44:43] Let’s take a look at what that would look like. What I’m keeping my eye on as I make these changes is this number right here, the 57%. I’m trying to get in the neighborhood of 40%. That’s really what I’m trying to do, just because I know that if I were in your situation, I could then afford to eventually go out and get my own place, which is the goal you have. We don’t have to get to 40% exactly, but just see that we’re moving in the right direction. So let’s take this number from 1,145 to even– well, you pay 500 bucks a month for gas. Damn, is that premium gas?

[00:45:22] Gabriel: Yeah.

[00:45:23] Ramit: Yeah. See, this is the thing. When you get expensive stuff, it has all kinds of expensive accessories with it. So trust me when I say this. Whatever car you get next should use the cheapest gas possible. That alone saves you tons of money every month. You see what I’m saying? All right. Let’s say that we’re able to turn this number into, uh, I don’t know. I want to be a little conservative here. 800 bucks. So that’s 345 bucks a month. Can I just point something out? So the minor changes we’ve made so far, they’re really not that big, would get you $675 a month in extra cash. What would you do with that money?

[00:46:09] Gabriel: To pay off the quad. 

[00:46:12] Ramit: Oh, shit. We didn’t talk about that quad. Hold on. Sorry. We got to talk about that. Why is that quad sitting in the backyard and not just sold? Can someone explain that to me?

[00:46:21] Gabriel: I didn’t want to sell it, but I can sell it. 

[00:46:25] Ramit: How much can you get if you sell that thing?

[00:46:28] Gabriel: I don’t know. 

[00:46:29] Ana: Whatever we owe on it. 

[00:46:30] Ramit: Yeah. Or whatever. Just get rid of that thing. Just get rid of it.


[00:46:37] Ramit: Okay, listen. I want to acknowledge a personal philosophy that I have of money, which is, if you made a bad purchase, get rid of it. Stop throwing good money after bad. This is why you sometimes hear me advising couples to sell their house, even at a loss, which is incredibly difficult for people to do because it means they actually have to face the decision they made. 

[00:47:00] You know what most people do? They just keep on paying for something that is slowly causing their finances to sink. And they agonize, and they worry, and they get in fights about finances for years. It almost never gets better. My suggestion, rip that bandaid off. Because, remember, it’s hard to look forward when you are so busy looking backwards with your finances. 


[00:47:27] Ramit: That’s going to save you quite a bit of money as well every month. All right. So you got 800 bucks extra per month. What do you think about that?

[00:47:39] Gabriel: Um, I’m surprised, to be honest, because it seems like– I didn’t think we could get that much cut back and have that much more money.

[00:47:53] Ramit: Mm-hmm. 

[00:47:54] Gabriel: I didn’t know where it would come, I guess, in my thinking.

[00:48:00] Ramit: The fact is you, with a few minutes of work, cut 800 bucks a month off of this. What do you think about the exercise that we did with the conscious spending plan?

[00:48:14] Gabriel: I think it’s a great– and personally, for me, it was foggy. My vision was foggy, but now I can see.

[00:48:26] Ramit: Yeah.

[00:48:26] Gabriel: Maybe not the finish line, but I can see that there might be a finish line. So I feel a lot more motivated to actually start getting more involved. I’m excited. 

[00:48:44] Ramit: Really like that. I like that. Ana, what about for you?

[00:48:50] Ana: I liked it. I enjoyed seeing how we can play around with the numbers, and just by moving a few things around and selling the quad, or even, um, yeah, just thinking about the possibility of looking into getting a different car, I think that’s huge.

[00:49:09] Ramit: I didn’t hear you pushing back, fighting. None of that. I was like, all right, we got a problem. Could we do this? I’ll stop doing that. A lot of selflessness, which I think was really inspiring. How do you want to go forward? How do you want to manage your money together so it’s not just one of you doing it and the other handing over a paycheck?

[00:49:37] Gabriel: Well, I think I need to take more initiative in getting to know– I guess, maybe even actually doing a few of the payments myself, just being more involved. And I need to sacrifice now so we can have a better future.

[00:49:56] Ramit: Gabriel’s in charge of the ATV sale. Can we set a timeline? How long? 

[00:50:03] Gabriel: A month.

[00:50:04] Ramit: Love it. If you do it tomorrow, that would be amazing. Get some video. I want to see the video of them taking that thing away.

[00:50:09] Gabriel: Okay.


[00:50:10] Ramit: Let’s check out a follow up video from Ana and Gabriel. 

[00:50:14] Gabriel: What I find surprising is that with a few minor tweaks that we did to our budget, which I didn’t really think were possible, our financial future has, um, cleared up. What I take from it is that now I’m more motivated than ever to go ahead with that plan and get out of debt sooner.

[00:50:35] Ana: I would say my biggest surprise is how on board he was, um, during our call, and how much he was just contributing and sharing. And I’ve seen, about a week or two out, he’s still motivated, and we’re talking about the changes that we need to make. And then the second thing, my biggest takeaway, is that it’s not too late for us. We can still retire, hopefully being, uh, millionaires. And so that was super encouraging to me because I thought we were late and, um, we’d be struggling as we got older. But, um, yeah, those were our takeaways. Thank you.

[00:51:11] Ramit: I want to thank Ana and Gabriel for coming on the podcast, being so candid. I also want to thank you for listening and taking away your key lessons. Do me a favor. If you enjoy this podcast, go to Apple Podcasts and leave a written review. It really helps the podcast grow. And of course, if you want to learn more about money psychology, go to iwt.com/podcastnewsletter to get this Saturday’s newsletter, because once we send it out, we will not send it out again. Thanks for listening.